ABN (Australian Business Number)

What is an ABN?

An Australian Business Number (ABN) is a unique 11-digit identifier issued by the Australian Business Register (ABR) to businesses operating in Australia. For contractors, an ABN is essential for invoicing clients, claiming GST credits, and establishing your business identity.

Without an ABN, clients may be required to withhold 47% of your payment for tax purposes.

Why Contractors Need an ABN

Legal Requirements

• Invoicing: Required on all tax invoices over $82.50 (including GST)
• GST registration: Needed if your turnover exceeds $75,000
• Government contracts: Most government work requires an ABN
• Business dealings: Banks, suppliers, and clients expect one

Practical Benefits

• Avoid pay-as-you-go (PAYG) withholding from payments
• Claim GST credits on business purchases
• Appear professional and legitimate to clients
• Access business banking and finance products
• Register a business name

ABN vs ACN vs TFN

Sole trader contractors typically need an ABN and TFN but not an ACN.

How to Apply for an ABN

Eligibility

You can apply for an ABN if you're:

• Starting or running a business in Australia
• A contractor providing services (not an employee)
• Making supplies connected with Australia

Application Process

1. Gather information: TFN, business details, identity documents
2. Apply online: Through the Australian Business Register (abr.gov.au)
3. Answer questions: About your business structure and activities
4. Receive ABN: Usually within minutes for straightforward applications

Required Information

• Your Tax File Number (TFN)
• Business structure (sole trader, partnership, company)
• Business address and contact details
• Description of business activities
• Expected business income
• Associates' details (if applicable)

ABN and GST Registration

When to Register for GST

GST registration is:

• Compulsory if your annual turnover is $75,000 or more
• Optional if turnover is below $75,000

Benefits of GST Registration

Even if not required, GST registration lets you:

• Claim GST credits on business purchases
• Appear more established to commercial clients
• Simplify pricing (all GST-inclusive)

GST Obligations

Once registered, you must:

• Charge 10% GST on taxable supplies
• Lodge Business Activity Statements (BAS)
• Pay collected GST to the ATO
• Keep records for 5 years

Using Your ABN on Invoices

Tax Invoice Requirements

For invoices over $82.50 (inc GST), include:

• The words "Tax Invoice"
• Your business name and ABN
• Date of issue
• Description of goods/services
• GST amount (if registered)
• Total price

Example Invoice Header

TAX INVOICE

Smith Building Services
ABN: 12 345 678 901

123 Trade Street
Sydney NSW 2000

ABN and Contractor vs Employee

Why It Matters

The ATO closely monitors whether workers are genuine contractors or employees. Having an ABN doesn't automatically make you a contractor—the nature of the work relationship determines this.

Contractor Indicators

• Control over how work is done
• Provide own tools and equipment
• Work for multiple clients
• Bear financial risk
• Can subcontract work
• Submit invoices (not timesheets)

Employee Indicators

• Work directed by employer
• Use employer's tools
• Work exclusively for one business
• Receive regular wages
• Entitled to leave and benefits

Getting It Wrong

If the ATO determines you're an employee:

• Your "client" may owe superannuation and PAYG
• Penalties and interest may apply
• Your tax situation may change

ABN Lookup and Verification

Checking ABNs

Before paying contractors, businesses often verify ABNs through:

• ABN Lookup (abr.business.gov.au)
• Confirms the ABN is valid and active
• Shows GST registration status
• Displays business name and details

Why Verification Matters

• Ensures contractor is legitimately registered
• Confirms GST status for claiming input credits
• Protects against fraudulent invoices
• Required for some government contracts

Keeping Your ABN Current

Update Requirements

Notify the ABR within 28 days of changes to:

• Business address or contact details
• Business activities
• Associates or authorised contacts
• Business structure changes

Cancellation

Cancel your ABN when you:

• Stop operating your business
• No longer need an ABN
• Change business structure (may need new ABN)

Common ABN Mistakes

Using an invalid ABN: Always verify your ABN is displaying correctly—typos mean clients may withhold tax.

Not updating details: Outdated information can cause compliance issues and missed communications.

ABN for employees: Don't get an ABN just because an employer asks—understand your true work status.

Forgetting GST threshold: Monitor turnover and register for GST when required.

Not including ABN on invoices: Missing ABN can result in 47% withholding from your payment.

ABN and Business Structure

Sole Trader

• ABN linked to your personal TFN
• Simplest structure for individual contractors
• You and the business are the same legal entity

Partnership

• ABN for the partnership itself
• Partners share income and liability
• Partnership TFN separate from personal TFNs

Company (Pty Ltd)

• ABN and ACN both required
• Company is separate legal entity
• More complex setup and compliance

Trust

• ABN for the trust
• Trustee manages on behalf of beneficiaries
• Complex structure requiring professional advice

The Bottom Line

An ABN is fundamental to operating as a contractor in Australia. It establishes your business identity, enables proper invoicing, and ensures you receive full payment without unnecessary withholding.

Getting your ABN is free and straightforward—apply online through the Australian Business Register and you'll typically receive your number within minutes. Just remember that having an ABN comes with responsibilities, including keeping records, meeting tax obligations, and updating your details when things change.